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Determining why gas costs so much

February 4, 2012
The Daily News

It's readily apparent that gasoline prices in Marquette County are consistently among the highest in the state.

What's not clear is why that's so. The Mining Journal has asked the question many times in many articles over the years, but we've never gotten a clear answer.

In an investigative story Monday's paper, we uncovered a number of factors which contribute to the high price of gas in Superiorland compared to other places in Michigan. Variables such as location, population size and of wholesale gas costs all factor into the high prices. We are farther from gas sources, we have fewer people than metro areas and local service stations have higher overhead costs.

The factors can account for why Marquette County might have more expensive gas prices than downstate, but they don't show why other counties in the U.P. still have lower prices at the pump. We're not the most remote spot in the county, nor the most sparsely populated. So we find those factors inadequate to explain these troubling statistics compiled from AAA:

- For 2011, Marquette County's weekly average gas prices were higher than the Michigan average for 46 out of 51 weeks compared.

- The county's prices were higher than the national average for 32 weeks.

- When gas prices in Marquette are high, they are almost always higher than state or national averages. Even when they are relatively low, prices rarely dip below the state averages.

Then there are the disturbing and inexplicable spikes in gas prices. Early in the year, when the county average was higher than the state figure, it tended to be between 5 cents and 10 cents higher. But beginning around September, area averages began to widen the gap, running 20 cents to 30 cents higher than state averages.

Even gas industry experts were unsure why a jump like this would occur.

Patrick DeHaan, senior petroleum analyst for www.gasbuddy.com, points to one major factor in local gas prices. And we have a gut feeling this is really at the root of the problem - lack of competition.

As DeHaan said, many times prices hinge on healthy competition. "If nobody's taking that leading step, Marquette will have to be higher because nobody's pushing the competition."

Without at least one gas station willing or able to lower its price, DeHaan said other stations have no incentive to do so. Marquette gasoline consumers are a relatively captive audience, and without vigorous competition on price, stations can charge a premium.

We think there's some good gas news looming, though.

In November, the Keweenaw Bay Indian Community started work on a planned gas station in Marquette Township, demolishing the former Los Tres Amigos restaurant building. A large station like the tribe-run Pines in Baraga, could bring healthy competition and more mainstream gasoline pricing to the whole Superiorland area.

While tribal officials said the project is still in the planning phase, it might be just the right market development to bring an end to our local gas gouge.

The Mining Journal

Marquette

 
 

 

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